The provincial government is scrapping a program that for the past decade has provided leaky-condo owners with interest-free loans to pay for repairs
By Derrick Penner
The Vancouver Sun – August 1, 2009
Housing and Development Minister Rich Coleman said the loan program has more than run its course and is no longer sustainable.
The program was established as condo-owner advocates called on the government – whose building codes and regulatory programs were blamed by some for the problem – to foot the entire bill for the repairs, which is estimated at several billion dollars or more.
Critics called the move “a betrayal” of condo owners whose units have not been repaired yet.
Coleman said he has asked the government’s Homeowner Protection Office, which administers the loan program, to review its operations and determine “what other programs may or may not be necessary.”
His ministry confirmed that the HPO’s chief executive, Ken Cameron, is leaving his job.
In addition to the loan program, the HPO runs education programs for the construction industry, sets standards for and licenses homebuilders, renovators and strata management companies, and monitors the homebuilding industry home warranty program that was brought in after the leaky-condo crisis collapsed the existing program.
Established by the then-NDP government in 1998, the program was initially envisioned as a 10-year, $250-million effort to help owners repair leaky buildings built before 1999.
The HPO has loaned out almost $670 million to the owners of 16,000 condo, primarily on the South Coast.
“I think the moral responsibility was met by successive governments by continuing the program longer than it was intended to go, and by funding it at a much higher level than it was intended to be,” Coleman said in an interview.
Opposition housing critic Shane Simpson called it a bad decision that leaves current owners of leaky condos high and dry.
“I think it’s nothing short of a betrayal of leaky-condo owners by the premier, by the minister and the government,” Simpson said in an interview.
“The government made a commitment some 10 years ago to help people to deal with these leaky condos, and they’re now turning their backs on who knows how many people who are still facing this problem.”
Simpson added that there is a continued demand for the loans.
The HPO will stop taking new applications immediately and process the 100 or so pending applications it has in hand, with a view to wrapping up the program by Dec. 31.
Coleman said the government will introduce legislation in the next session to officially end the program.
He added that the province topped up the loan program with $9 million to make sure it could fund its pending obligations after the HPO hit the limit of its financing earlier this year and had to stop awarding loans.
The loan program was funded by a $750-per-home levy on new construction, but the sharp drop in housing starts resulted in a drop in revenue to the program. Coleman said the levy will remain in place since loans are still outstanding.
He said the majority of applications the HPO now receives are from buildings that have leaked because of poor maintenance rather than construction failure.
“That’s not what the program is for, so basically what we’ve done is said it’s time to sunset this program,” Coleman said.
However, more than a year ago the HPO received a report from consultants McClanaghan & Associates that estimated some 45 to 55 per cent of the 160,000 strata-owned apartments built in B.C. during the leaky-condo period – considered between 1982 and 1999 – had suffered “premature building envelope failure.”
The report’s authors estimated that between 45 and 68 per cent of the leaky units had not yet been repaired, and that by 2012, up to one-third of them would still need fixing.
Pierre Gallant, an architect with engineering consulting firm Morrison Hershfield, said it is hard to estimate the number of buildings that still need repairing, but said the loan program was “hugely successful and very helpful” in encouraging homeowners to take action on their problems with leaky condos.
“Not all [buildings] have been repaired,” Gallant said. “Probably the majority have been repaired, but what does that mean? Fifty-one per cent, or 90 per cent?”
Gallant’s concern is that without the loan program, owners will be more reluctant to address their problems with leaks and buildings will go longer without repairs.
Coleman said the government would have to look at further evidence and determine if there was a “different problem that we need to address.”
Advocates for leaky condo owners were outraged.
“I think it’s atrocious,” said James Balderson, a long-time advocate for leaky-condo owners. He said he could not understand why the provincial government can’t extend a loan program when the government of Canada can bail out General Motors.
Friday’s decision also did not sit well with former premier Dave Barrett, who headed a commission that looked into B.C.’s leaky condo problem.